A pharmacy CEO and his employees have been indicted by a federal grand jury for allegedly committing $60 million in health care fraud.

The federal grand jury returned a Second Superseding Indictment, leveling additional charges against Kim Mulder, the CEO of Kentwood Pharmacy, and 13 pharmacy employees, according to U.S. Attorney Patrick Miles, Jr. in Grand Rapids.

By allegedly submitting claims for drugs that were misbranded, adulterated and dispensed in violation of federal and state laws, the indictment charges that the defendants defrauded Medicare, Medicaid and Blue Cross Blue Shield of Michigan.

The indictment alleges that Kentwood Pharmacy received in excess of $70,000,000 from these health care benefit programs, and the government is seeking to forfeit more than $60,000,000 as a result of the alleged health care fraud.

Conspiracy to commit health care fraud is punishable by up to 10 years of imprisonment and a fine of $250,000 or twice the gross gain of the offense.

Misbranding drugs

Mulder, Clarke, Harden and six other Kentwood Pharmacy employees also face a charge of conspiracy to misbrand drugs, which was part of an earlier indictment.

The conspiracy to misbrand drugs alleges that the defendants placed returned drugs into stock bottles, which bore incorrect lot numbers and expiration dates, and into amber pill vials that bore no lot numbers or expiration dates.

The misbranding conspiracy also charges that a number of the defendants took actions to conceal this conduct by sorting returned drugs at unlicensed off-site locations, including a strip mall office and the basement of the chief pharmacist’s home.

Conspiracy to misbrand drugs is punishable by up to five years of imprisonment and a $250,000 fine.

False records

A third charge alleges that Mulder, Harden and a billing manager conspired to create false prescription records.

This charge is punishable by up to five years of imprisonment and a $250,000 fine.

Money laundering

Mulder also faces three counts of money laundering and a single count of structuring monetary transactions to avoid bank reporting requirements.

The money-laundering charges are each punishable by up to 10 years of imprisonment and a $250,000 fine and the structuring charge is punishable by up to three years of imprisonment and a $250,000 fine.

Misdemeanor

In addition to the felony charges, the Second Superseding Indictment also charges five additional Kentwood Pharmacy employees, who were allegedly involved with the sorting and packing of the returned drugs, with misdemeanor misbranding offenses punishable by up to one year of imprisonment.

Prior fines

In November 2013, U.S. District Judge Janet T. Neff sentenced three semi-retired pharmacists to fines ranging from $15,000 to $30,000 on charges of felony misbranding of drugs related to their part-time employment at Kentwood Pharmacy.

Investigation

The ongoing investigation of this matter involves the FDA, FBI, DEA, HHS-OIG, IRS, and the Michigan State Police.

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